Financial Advice Blog

News about low doc or no doc home loans have died down significantly over the last year. That’s because the new federal government regulations have changed the way Australian’s can borrow money.

To borrow money in today’s climate you must have your financial information up to date including:

• Tax returns
• Show genuine savings history
• Proof of income, assets or liabilities
• Prove that borrowing the amount of money you are applying for will not impact your lifestyle or inflict any hardship
• BAS statements (if self-employed) and must be self-employed for a minimum of 2 years

For some home buyers, this is an impossible check list of requirements. In the past, people who could not provide all the above documentation might have considered applying for a no or low doc home loan.

“While the low doc loan option is still available, it often carries a slightly higher interest rate and much stricter credit conditions than most other home loan products,” said Gill McLean from moneyQuest. 

The major banks require applicants of Low Doc Loans to be:

• self-employed for a min of two years
• registered for GST
• able to provide BAS statements or trading account statements

“The no doc loans we used to hear a lot about are now a thing of the past. They are no longer available,” McLean added.

Some non-bank lenders have what McLean likes to call a “lite doc” home loan option.    

“The ‘lite’ doc home loan requires less documentation than the low doc but more that the old no doc used to. Again, a slightly higher interest rate is often attached to this kind of product,” she said.

Work with a home loan expert

It’s never been more important to work with a mortgage expert to make sure you apply for the best home loan for your individual situation. McLean suggests meeting with a mortgage broker before you start the search for the perfect home.

“Then you can approach your real estate search with some comfort and peace of mind,” McLean added.

Mortgage brokers are experienced at finding financial solutions for all kinds of home owners. If you have experienced fluctuating cash flow or cannot provide financial statements and tax returns for the past two years, there still may be a home loan solution for you.

As with any major financial commitment, it’s best to consider your individual situation and seek professional advice.

For more information about home loans, to make an appointment with a mortgage broker or to compare home loan rates and offers please visit the ratesonline.com.au web site.

 

Filed under: Financial Advice